The Bank of England has raised Bank Rate to 4% from 3.75%, its first rise since August 2023. The Monetary Policy Committee voted by 8 votes to 1 at its decision on Thursday 5 November, the Bank said.
The decision matches the call made by economists in the Reuters poll reported here earlier. The dissent went the other way from the poll's expectation. Catherine Mann voted for a larger rise to 4.25%, CNBC and Business Standard report, whereas the poll had expected a vote to hold.
The Bank cited energy-driven inflation from the US-Iran conflict and said further rises may be needed if the conflict keeps energy prices high. Its statement, as quoted by Euronews, said "the degree of inflationary pressure in the pipeline is now sufficient to warrant an increase in Bank Rate".
LBC reports the Bank now expects inflation to peak at around 5% by mid-2027, up from a previous projection of 3.2%. CPI inflation was 3.5% in September, an 11-month high.
Shortly after the decision the two-year gilt yield was up about 2 basis points at 4.76% and the FTSE 100 was up 0.7%, Reuters reports.
The rise comes a week after the Budget on 28 October.